Labour has waged a 'phoney war' on the drug problem by squandering billions on ineffective treatment while presiding over Europe's most liberal drug regime, a damning report claims today.

The study highlights rising levels of drug use, fewer prosecutions and a treatment system which has 'trapped' thousands of people on the heroin substitute methadone.

The report, from the Centre for Policy Studies, urges ministers to return to tough enforcement of drug laws, and copy nations such as Sweden and the Netherlands which are widely seen as liberal but in reality take a far firmer line than the UK.

Drugs expert and author of the report Kathy Gyngell says Britain spends £1.5billion a year combating drugs, but enforcement operations are underfunded and costly treatment programmes do not work.

More than £800million a year is spent on treatment projects, the report states, compared with £380million on trying to keep drugs out of the UK. And while ministers boast of 200,000 addicts in treatment, less than three per cent of them have become 'clean'. Around 147,000 are simply kept on prescribed substitutes, such as methadone, and only 6,700 have undergone residential detox treatment. Spending on methadone has trebled in the past five years to around £300million a year.

The study is scathing of the Home Office's 'FRANK' online drugs advice service. It says the website 'effectively endorses' drug-taking and 'epitomises the Government's low aspirations' in keeping young people off drugs.

Over the last decade consumption of Class A drugs has risen dramatically.

The Government claims that overall cannabis use is falling but Britain still tops the European league for use among school pupils with 29 per cent admitting to having taken the drug --compared with an EU average of 19 per cent.

In 1998, 3.8 per cent of UK adults admitted having tried cocaine. By 2007 that had risen to 7.7 per cent, more than double the EU average. The UK suffers 47.5 drug-related deaths per million adults a year compared to 22 in Sweden and 9.6 in the Netherlands.

'The UK drug problem is the worst in Europe,' the report says. 'The UK leads in "recreational" drug use with the highest levels of cocaine, ecstasy and amphetamine consumption.'

Miss Gyngell says the Government must focus its efforts on stopping drug use rather than reducing the harm drugs cause. It should focus treatment on detox and rehabilitation rather than substitute drugs, and draw up 'a tougher, better-funded enforcement programme to reduce the supply of drugs'.